Forecast

Japan, US struggle to bridge gap on freer trade

Associated Press| on April 22, 2014

TOKYO -- Japanese and U.S. negotiators are struggling to reach a preliminary agreement on a free trade pact that might have served as a centerpiece for President Barack Obama's visit to Tokyo this week.

Japan's economy minister Akira Amari told reporters Tuesday that the two sides remained "at a considerable distance" over trade in farm products and vehicles a day before Obama arrives.

"Depending on the rate of progress we may naturally close the gap," Amari said. The two sides would continue talks ahead of Obama's summit on Thursday with Prime Minister Shinzo Abe, he said.

A Japan-U.S. agreement is seen as crucial for progress on a wider deal for the 12 nations involved in the Trans-Pacific Partnership. Each country must strike a deal with other prospective members to conclude the pact.

The TPP sets trade rules and is seen as a precursor to a future wide free-trade arrangement for the entire Pacific Rim region.

The major sticking points between Japan and the U.S. have to do with removing tariffs on agricultural products such as rice, beef, dairy products and sugar that Japan has long protected from foreign competition, Japanese media reported.

Automobiles are another hurdle. Japanese carmakers exported 4,731 vehicles per day to the U.S. last year, while Japan imported less than 62 per day. Auto-related trade accounted for nearly three-quarters of the 6.1 trillion yen ($59.5 billion) U.S. trade deficit with Japan in the fiscal year that ended on March 31, according to Japanese data.

Citing unnamed sources, Kyodo News service reported said the U.S. was asking Japan to set a minimum level for American automobile imports. Japan wants the U.S. to ease tariffs on imports of pickup trucks.

A group of Republican lawmakers visiting Tokyo this week met with Japanese officials to show their support for a deal.

"I'm pleased to hear that our negotiators along with theirs are making progress and all of us would say that resolution of that agreement would mean real job growth, real economic prosperity not only for you here in this region but for us in the United States," House Majority Leader Eric Cantor of Virginia said Tuesday.

In Japan and elsewhere, there are concerns over making politically difficult market-opening concessions without reassurance that Obama will have the "fast track" authority to get congressional approval for TPP. Critics of the plan have balked at granting such power for a trade deal whose contents have been kept largely secret as a precondition for joining.

Even if Obama and Abe sign off on some form of agreement in Tokyo, many other issues remain to be resolved, said Rep. Rosa DeLauro, a Democrat from Connecticut who has lobbied others in her party to oppose so-called "Trade Promotion Authority" for Obama.

"As the conventional wisdom goes, if Japan and the United States can sort out market access issues, agriculture, automobiles, then this massive trade deal can at last be concluded," DeLauro said in a conference call last week. "This is not really the case."